NEW YORK (CNNMoney) -- China's all-important manufacturing sector took a hit in May, as the country's factories continue to struggle amid global economic woes.
The National Bureau of Statistics said Friday that its official index of purchasing managers' sentiment dropped to 50.4 in May, its lowest level in five months, from 53.3 in April.
The index bottom out at 49 in November. Any reading above 50 indicates expansion in the sector, while readings below 50 indicate contraction.
Meanwhile, HSBC also issued a report Friday morning showing that factory output fell to 48.4 in May, with average input costs falling for the first time since January. The weak report from the banking company signals the seventh straight month of declining manufacturing activity in China.
"Companies cited muted global demand conditions as the main reason behind the overall decrease in export sales," the HSBC stated in its report.
The banking company's report also stated that the country's employment fell at the fastest rate in 38 months -- the sharpest decline in more than three years.
Manufacturing accounts for more than a third of the Chinese economy, so the PMI reports are one of the country's most closely watched indicators.
As global economic growth has slowed in the last year, exports to Europe -- China's largest foreign market -- has taken a hit as the debt-ridden region teeters on the brink of recession.
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